Environ­mental Protection

We meet our responsibility to protect the environment in many different ways. We continuously work to reduce the environmental impact of our business activities and develop product solutions that benefit the environment. As a pure life science company too, Bayer continues to be actively committed to climate protection.

For us, a resource-friendly and low-emissions approach to raw materials and energy is ecologically and economically expedient and efficient. These measures are designed to reduce environmental impact and, at the same time, cut the costs associated with materials, energy, emissions and disposal.

Responsibilities and framework conditions are stipulated at Group level, e.g. by corporate policies, targets and key performance indicators (KPIs). We use certified HSEQHSEQstands for health, safety, environment and quality. management systems to control operational implementation. Our environmental standards apply worldwide.

Energy consumption

As a consequence of the deconsolidation of Covestro, we now present two sets of data on energy consumption at Bayer: with and excluding our service company Currenta. Currenta operates its own combined heat and power plants at the Chempark sites in Germany and sells the electricity and steam generated there primarily to other companies with energy-intensive production processes (including Covestro). This split allows transparent presentation of energy use in the Bayer Group.

Total energy consumption falls compared with 2016

Compared with 2016, Bayer’s total energy consumption declined by 1.6% to 25.8 petajoules in 2017. When calculating total energy consumption, we differentiate between primary and secondary energy consumption. Primary energy consumption mainly comprises fossil fuels for our own generation of electricity and steam. Secondary energy consumption reflects the purchase of electricity, steam and cooling energy.

Excluding Currenta, Bayer’s total energy consumption fell in 2017 by 4.1% to 15.4 petajoules. Primary energy consumption at Bayer excluding Currenta fell by 15.1%, while secondary energy consumption increased by 10.2%. This reflects the divestment of the chemical park infrastructure, including the power plant, at the Crop Science site in Institute, West Virginia, United States, which reduced primary energy consumption. At the same time, site-specific secondary energy consumption increased.

The proportion of primary energy sources used in generating the electricity consumed depends on the respective national electricity mix.

Primary energy consumption at Bayer excluding Currenta

11,647

10,555

11,347

9,028

7,661

Natural gas

7,410

7,587

7,822

6,590

6,447

Coal

2,616

2,092

2,535

1,400

285

Liquid fuels

202

202

165

253

175

Waste

1,142

455

571

556

539

Other1

277

219

254

229

215

Secondary energy consumption at Bayer excluding Currenta

5,628

5,467

5,991

7,022

7,739

Electricity2

4,009

4,028

4,323

4,064

4,075

Steam

540

498

657

2,008

2,547

Steam from waste heat (process heat)

256

77

176

72

70

Cooling energy

823

864

835

878

1,047

Total energy consumption at Bayer excluding Currenta

17,275

16,022

17,338

16,050

15,400

Total energy consumption at Currenta

10,697

10,266

7,339

10,193

10,432

Total energy consumption in the Bayer Group

27,972

26,288

24,677

26,243

25,832

Since it operates power plants, Currenta uses primary energy resources. The steam and electricity generated are mainly supplied to companies with energy-intensive production operations with which it has supply agreements. Demand from these companies is exposed to fluctuations that are beyond the influence of Currenta as an energy service provider. This explains the variations in Currenta’s total energy consumption (2017: 10.4 petajoules, an increase of 2.3%).

Energy efficiency improved further

Group target 2020:

improvement of 10% in energy efficiency

With effect from 2017, Bayer indicates energy efficiency as the relationship between the energy it uses and its external sales, instead of the manufactured volume applied previously. Following the deconsolidation of Covestro, this is a more appropriate reference value for our product portfolio.

Our Group target for 2020 is to improve the energy efficiency of Bayer excluding Currenta by 10% relative to 2015. Bayer’s external sales excluding Currenta fell by 0.3% in 2017, while energy consumption decreased by 4.1%. As a result, our energy efficiency improved by around 3.8% compared with the previous year. Compared with 2015, energy efficiency has improved by 12.6% overall.

Combined heat and power processes account for high proportion of in-house energy generation

More than 90% of our own energy generation comes from highly efficient combined heat and power processes that convert approximately 80% of the fuel energy used into electricity and heat. In addition, we purchase electricity on the market – through energy exchanges, for example. The electricity and heat generated and purchased are used in our own production facilities and third-party facilities. The proportion of renewable energies is determined by the energy mix of our energy suppliers. We comment in detail on these issues in our CDPCDPis a nonprofit organization that works on behalf of institutional investors to compile annual rankings of detailed environmental data, especially in respect of greenhouse gas emissions (CDP-Climate) and water management (CDP-Water), from over 5,000 companies worldwide. According to CDP, more than 800 investors representing fund assets of around US$100 trillion currently draw on this information for their investment decisions. (formerly Carbon Disclosure Project) Report.

Air emissions

Climate protection

At Bayer, air emissions are caused mainly by the generation and consumption of electricity, steam and process heat. As part of our Bayer Climate Program we have been able to continuously improve our energy efficiency, primarily by focusing on production and process innovations and introducing energy management systems. Despite significantly expanding production, (Bayer including Covestro’s energy-intensive production facilities), we reduced our absolute greenhouse gas emissions significantly between 1990 and 2015, namely by around 30%. We have documented our successes in the CDP reports and in 2017 were again awarded leadership status, thus reaffirming the top rating of the previous years.

As a pure life science company too, we want to continue making positive contributions to protecting the climate and managing the effects of climate change on several levels. This includes reducing our production-related emissions with targets relating to improving energy efficiency and lowering specific greenhouse gas (GHG) emissions. In the future, we plan to focus more on reducing emissions in nonproduction areas. These include our vehicle fleet (Sustainable Fleet initiative), investigating the use of electric vehicles (electric mobility programs), optimizing logistics and further developing our information and communication technologies in terms of environmental aspects (Green IT). In addition, we are investigating further potential ways to lower greenhouse gas emissions along the value chain, such as the question of whether state-of-the-art cultivation methods and innovative solutions for precision agriculture contribute to a lower CO2 footprint in agriculture.

Online Annex: A 1.4.3.3-1

We are also working further to reduce our CO2 emissions in connection with our global fleet of over 25,000 vehicles. For the just over 4,200 vehicles newly registered worldwide in 2017, these rose to 157 g/km (2016: 145 g/km). Our goal as part of our Sustainable Fleet Initiative is to reduce average CO2 emissions to 110 g/km for new vehicles registered in 2020. In 2018, we shall reinforce our pilot projects on electric mobility, for example.

Transparency on greenhouse gas emissions

Bayer reports all Group greenhouse gas emissions in line with the requirements of the Greenhouse Gas (GHG)GHG protocolThe Greenhouse Gas Protocol is an internationally recognized tool for recording, quantifying and reporting greenhouse gas emissions. Its standards cover all emissions within a company’s value chain. Bayer aligns itself to the Corporate Standard for direct (Scope 1) and indirect (Scope 2) greenhouse gas emissions and also to the Corporate Value Chain (Scope 3) Accounting and Reporting Standard, which covers further indirect emissions along the value chain. Dual reporting was introduced in 2015 with the updating of the GHG guidelines for Scope 2. Indirect emissions have now to be reported using both the location-based and the market-based methods. The location-based method uses regional or national average emissions factors, while the market-based method applies provider- or product-specific emissions factors based on contractual instruments. Protocol. Direct emissions from our own power plants, waste incineration plants and production facilities (Scope 1) and indirect emissions from the procurement of electricity, steam and cooling energy (Scope 2) are determined at all production locations and relevant research and administrative sites.

Bayer reports in line with the updated GHG Protocol guideline for Scope 2, which states that indirect emissions must be reported according to both the location-based and the market-based methods.

In 2017, 94.86% of emissions were CO2 emissions, 3.69% N2O emissions, just under 0.64% partially fluorinated hydrocarbons and 0.08% methane.

2

Typically, CO2 in incineration processes accounts for over 99% of all greenhouse gas emissions. When determining indirect emissions, our calculations are therefore limited to CO2 and indicate direct emissions in CO2 equivalents.

3

The market-based method of the Scope 2 GHG Protocol most reliably reflects the indirect emissions and the success of emissions reduction measures, so we used emissions volumes calculated using this method when calculating the total and specific greenhouse gas emissions.

4

Specific Group emissions are calculated from the total volume of direct emissions, indirect emissions calculated using the market-based method of the Scope 2 GHG Protocol and emissions from the vehicle fleet, divided by the external sales volume. Quantities attributable to the supply of energy to external companies are deducted from the direct and indirect emissions.

In line with the GHG Protocol, in our energy balance we include all greenhouse gas (GHG) emissions from the conversion of primary energy sources into electricity, steam or cooling energy. This also applies to emissions of our service company Currenta, which additionally produces energy for other companies at the German Chempark sites in Leverkusen, Krefeld-Uerdingen and Dormagen that account for a significant proportion of our direct emissions. Consequently, the figures for the greenhouse gas emissions in the Bayer Group are substantially higher than the actual emissions resulting from the business activities of Bayer excluding Currenta alone.

In 2017, the Group recorded a reduction of 21.8% in total GHG emissions. GHG emissions of Bayer excluding Currenta fell by 4.8%.

Direct emissions diminished across the Group by 15.8%, mainly due to the overhaul of a coal-fired boiler at the Uerdingen site in Germany and the sale of the chemical park infrastructure at the Crop Science site (including the attached power station) in Institute, West Virginia, United States. Indirect emissions (market-based method) fell by 32.4%.

Group target 2020:

reduction of 20% in specific greenhouse gas emissions

As with the calculation method for our energy efficiency, we changed our reporting of specific greenhouse gas emissions in 2017. We indicate them as the relationship between GHG emissions at Bayer excluding Currenta and our corresponding external sales. We are looking to achieve a 20% reduction in specific greenhouse gas emissions by 2020 compared with 2015.

The reporting of all relevant indirect emissions from the value chain is bindingly regulated by the GHG Protocol Corporate Value Chain (Scope 3) Accounting & Reporting Standard. Bayer has identified eight essential Scope 3 categories, which we report on in detail in the CDP Report.

In 2017, the Bayer Group was involved in European emissions trading with 11 plants in total. The CO2 emissions of these plants amounted to approximately 1.85 million metric tons.

Reduction in other direct air emissions

Emissions of ozone-depleting substances (ODS) fell by 3.1% in 2017, while emissions of volatile organic compounds (VOCs) excluding methane dropped by 5.0%. This is mainly due to the sale of a site in France and the waste air treatment measures we have introduced in Vapi, India.

Online Annex: A 1.4.3.3-2

The main source of both types of emissions is the Crop Science site in Vapi, India, which accounts for 97.4% of ODS emissions and 67.9% of VOC emissions at Bayer. To significantly reduce these emissions, Bayer launched a project at this site five years ago with the goal of bringing together the many different sources of emissions at the site in a central waste air treatment facility. The last subproject is to be implemented in 2018.

Other air emissions in the Group were positively influenced by an overhaul of a power plant at the Krefeld-Uerdingen site in Germany. Sulfur dioxide emissions fell by 4.4%, particulate emissions by 8.0% and carbon monoxide emissions by 7.5%.

Lower number of environmental incidents

Number of Environmental Incidents

The number of environmental incidents – i.e. incidents that result in the release of substances into the environment – decreased from three to two in 2017. There was a personal injury in one of these incidents. Factors that determine whether there is a reporting obligation include, in particular, the nature and quantity of the substance, the amount of damage caused and any consequences for nearby residents. In accordance with our internal voluntary commitment, we report any leakage of substances with a high hazard potential from a quantity of 100 kg upward.

Both environmental incidents were transport incidents. Details of the environmental and transport incidents in 2017 can be found in the section on transport incidents in Online Annex A 1.4.3.2-5.

Use of water and emissions into water

Clean water in sufficient quantities is essential for the health of people, animals and plants. Therefore it is essential that industrial water usage does not lead to local problems in the future such as a shortage of water for the people living in the area. Our Water Position commits us to compliance with international and local legislation to protect water resources and use them efficiently. We are currently finalizing our Water Stewardship Strategy, in which we are combining and further developing our activities in this area.

Group target 2017:

establishment of water management at all sites in water-scarce areas

In line with our Group target between 2013 and 2017, we introduced a water management system at all Bayer sites in water-scarce areas or areas identified as being threatened by water scarcity by the WBCSD Global Water Tool™. Using a method developed by Bayer, we analyzed the yearly site data pertaining to water use, quality and source, and used this information to develop site-specific measures to introduce and improve water management.

Bayer supports the CEO Water Mandate of the U.N. Global Compact with the goal of working with key stakeholders to develop sustainable approaches for water usage. In our annual response to the CDP Water Disclosure, we report in detail on our water usage and the company-specific water footprint. This represents a progress report for the CEO Water Mandate.

Water use

In 2017, total water use in the Group was 98 million cubic meters (2016: 93 million cubic meters). Some 50% of all water used by Bayer is cooling water that is only heated in this process and does not come into contact with products. It can be returned to the water cycle without further treatment in line with the relevant official permits.

At our production facilities, we endeavor to use water several times and to recycle it. Water is currently recycled at 17 sites, accounting for 48% of the total water used. The various forms of recycling include closed cooling cycles, reuse of treated wastewater and recirculation of steam condensates as process water. A total of around 6.9 million cubic meters of water was reused in 2017.

Online Annex: A 1.4.3.3-3

1 The differences between volumes of water consumed and water discharged can be explained, for example, by unquantified losses due to evaporation, leaks, quantities of water used as raw materials in products and volumes of condensate generated through the use of steam as a source of energy.2 Sum from production processes, sanitary wastewater and rinsing and cleaning processes in production

The volumes of water from each source have remained within the usual fluctuation range over the past five years.

Wastewater

Process Wastewater VolumeMillion m3

The total quantity of wastewater, including process and sanitary wastewater, was 23 million cubic meters in 2017, which is 5.1% up on 2016. All wastewater is subject to strict controls before it is discharged into the various disposal channels. 75.9% of Bayer’s wastewater worldwide was purified in wastewater treatment plants (Bayer or third-party facilities). Following careful analysis, the remaining volume was categorized as environmentally safe according to official provisions and returned to the natural water cycle.

We aim to minimize our emissions into wastewater. In 2017, most of our water emissions fell. At the Dormagen site in Germany, however, discharges of nitrogen rose by 32% owing to a change in the production portfolio. In 2017, we also applied alternative means of disposing of product-containing wastewater such as incineration, distillation or chemical treatment.

Waste and recycling

Systematic waste management minimizes material consumption and disposal volumes. Safe disposal channels with separation according to the type of waste and economically expedient recycling processes serve this purpose. Production fluctuations and building refurbishment / land remediation work also influence waste volumes and recycling paths. In accordance with Bayer’s corporate policies, all production sites are obliged to prevent, recycle and reduce waste and dispose of it safely and in line with good environmental practices.

Higher volumes of waste

In 2017, the total volume of waste generated rose by 9.9%. Owing to various construction activities at the site in Wuppertal, Germany, the volume of nonhazardous waste increased by 5.5%. The volume of hazardous waste rose by 13.3%, primarily due to demolition work at the Belford Roxo site in Brazil. The volume of hazardous waste from production rose by around 5.7%, mainly due to changes in the production portfolio at the Dormagen site in Germany.

Definition of hazardous waste in accordance with the local laws in each instance

Total waste generated

729

718

759

770

846

Hazardous waste2

363

377

431

428

485

of which hazardous waste from production2

316

335

381

394

417

The volume of waste disposed of rose by 9.3% in total. The volume proportions for the three main types of disposal (landfill, incineration and recycling) have remained similar over the past five years. 25% of waste disposed of could be recycled.

Waste generated by Bayer only; definition of hazardous waste in accordance with the local laws in each instance

Total volume of waste disposed of1

744

720

768

769

840

Volume removed to landfill

255

216

228

247

314

Volume incinerated

267

274

272

227

210

Volume recycled2

210

216

241

228

214

Others3

12

14

27

67

102

Total volume of hazardous waste disposed of4

363

377

431

428

485

Volume removed to landfill

51

63

73

63

99

Volume incinerated / recycled

312

314

358

365

386

Our service company Currenta serves as a certified waste disposal plant operator at the Chempark sites in Germany. At these locations, Bayer disposes not only of its own waste, but also of waste from third parties (companies not belonging to the Bayer Group). In 2017, the waste incineration plants operated by Currenta generated almost 800,000 metric tons of steam from the incineration of more than 210,000 metric tons of waste from the Chempark sites and some external production companies.

Recycling

Recycling and processing / treatment is impossible for a large proportion of our materials, especially pharmaceuticals and crop protection products. Throughout the Group, we make use of opportunities for recycling within the framework of legal regulations.

Online Annex: A 1.4.3.3-6

Pharmaceuticals, Consumer Health and Animal Health

Production-related recycling takes place in line with the requirements of the relevant production site. The disposal of pharmaceutical products is subject to strict safety criteria, so no recycling is possible for the portfolios of these segments. Packaging materials are recycled in line with national regulations as part of the country-specific infrastructure for waste disposal.

Crop Science

Material-based recycling is important in Crop Science’s active ingredient and intermediate product manufacture and is regulated individually at each production site. Solvents, catalysts and intermediates are repeatedly processed and returned to the production process. In the global process development of active ingredients and intermediates, material recycling is considered an important development criterion.

Packaging materials are disposed of or recycled in line with national legislation. In many countries with no legal regulation, the industry has set up a returns system in collaboration with other providers.

Returns of obsolete stocks of crop protection products are limited to individual cases. The crop protection product industry has set up voluntary initiatives in various countries for the proper disposal of obsolete stocks. In addition, as part of its activities in the CropLife association, Crop Science is working with the Food and Agriculture Organization of the United Nations (FAO) and the World Bank to support the proper collection and disposal of obsolete stocks in Africa.